Trading Plan for 10/27

[pay]Pattern notes.
Not retracing Monday’s late-morning dive reinforces the dive’s sponsorship. And the late-morning dive needs all the reinforcement it can get. It originated after the morning’s bias window began lapsing, and had already met and held its target before a new window could open.

This timing doesn’t undermine the drop’s credibility – rallies already had the pre-defined purpose of refueling sellers. So the question is whether the drop fulfilled that selling pressure, or if it has instead triggered a new downleg. S&Ps fell 27 points Monday from high to low without the help of a bias window. Does it have sponsorship to fall a single point further?

The various types of support spanning 1063.00, 1065.75, 1066.50 and 1068.00 up to 1068.75. They lived up to their billing as being a rock and a hard place around 1066. Despite the drop’s stealth sponsorship, the burden of proof is on buyers. Four hours of ranging sideways at the lows doesn’t diminish the drop’s credibility – that’s four hours without buyers exploiting sellers’ hesitation.

Indicators and Internals.
There is no unfinished business outstanding from Monday’s technicals. It’s interesting how uninteresting technicals were during the afternoon’s ranging. The last hour’s momentary fresh low never convinced sellers or buyers to step into the fray. The afternoon’s meandering was just noise.

Tueday’s opportunities.
Fresh lows late Monday would have been driven by weak hands, probably extending a little lower Tuesday (e.g. 1054.00) before recovering strongly. Now any interim strength that holds 1071.00.00-1072.00 will more likely resolve down with potential to 1051.00 or 1042.50. Immediately recovering 1075.00 could end the downdrafts for a couple of days, until new sponsorship an be found. Meanwhile, the econ calendar is busy enough, especially considering no news on Monday. [/pay]